PRICE IS THE MAIN FACTOR FOR ONLINE SHOPPERS

More Slovaks hit the internet to shop

THE ECONOMIC downturn and better internet connections have drawn more Slovaks onto the internet to do their shopping. An increasing level of trust by Slovak customers in making online purchases has also contributed to this growth even though the online marketplace in Slovakia still trails behind some other countries. Slovaks are buying books, insurance policies, clothing, tickets for events, cameras, mobile phones, home appliances, electronics and many other kinds of products and services online. Industry experts expect online shopping to continue to grow and say that differentiating between online and traditional bricks-and-mortar shops will not be as clear in coming years.

THE ECONOMIC downturn and better internet connections have drawn more Slovaks onto the internet to do their shopping. An increasing level of trust by Slovak customers in making online purchases has also contributed to this growth even though the online marketplace in Slovakia still trails behind some other countries. Slovaks are buying books, insurance policies, clothing, tickets for events, cameras, mobile phones, home appliances, electronics and many other kinds of products and services online. Industry experts expect online shopping to continue to grow and say that differentiating between online and traditional bricks-and-mortar shops will not be as clear in coming years.

“Online shopping has grown continuously for the last four or five years in Slovakia,” Jozef Dvorský, the executive director of the Slovak Association of Electronic Commerce (SAEC), told The Slovak Spectator. “The crisis helped online shopping as people started to look for cheaper shopping alternatives. Price remains the main motivation for people shopping online.”

Monitoring the behaviour of online shoppers has provided information about the impacts of the economic crisis, Dvorský said and it revealed that even though overall turnover remained stable or grew only moderately the number of transactions, i.e. the number of internet purchases, jumped by 30 percent or more. He commented that this proves that new customers had come to the internet to shop even though they were thrifty when they made purchases online.

The experiences of hej.sk, one of the largest internet shopping portals in Slovakia, also reflect this trend and a changing behaviour among Slovak shoppers.

“Slovaks … have significantly curbed purchases of items which they do not necessarily need and also they have focused more on cheaper variants of products,” Jitka Součková, marketing director of hej.sk told The Slovak Spectator, adding that shoppers put the most stress on price. “But it is likely that the impacts of the crisis will diminish and it is possible to expect a gradual return to the pre-crisis level.”

Tomáš Hodboď, product manager at Heureka.cz, another active player in Slovakia’s online marketplace, sees price as the primary factor influencing people’s decisions when purchasing online, followed by saving time, the quality of services and the comfort of shopping from home.



“This is why prices in internet shops are lower and will remain lower than in bricks-and-mortar shops,” said Hodboď. “Certainly this will be true also during the next few years when there will be a steep increase in the popularity of internet shopping.”

Součková said that the latest surveys show that online shopping is quite popular in Slovakia and that as many as three quarters of internet users have purchased goods or services online. This puts Slovakia in second position behind the Czech Republic within the Visegrad Group of Slovakia, Poland, Hungary and the Czech Republic.

“Slovaks are relative open to the possibility of shopping online but many are afraid of e-shops that may not be trustworthy,” said Součková.

SAEC has responded to these fears by undertaking a certification process for its member companies, as well as by preparing a ‘decalogue’ or a set of rules for safe online shopping.



Outlook is positive



The latest economic results for the industry indicate that the online shopping market is growing again. The order volume for member companies of SAEC confirm significant growth in online shopping for the first half of 2010.

“Our online shops hej.sk, cetelem.sk, hop.sk, mall.sk, martinus.sk, obchodny-dom.sk and pelikan.sk fulfilled a total of 286,112 orders during the first half of 2010 – which is 117,864 more orders, or a 70 percent increase, compared with the first half of 2009,” Dvorský said. He added that the turnover of these online shops increased by 24.9 percent y-o-y to €35.77 million but “on the other hand, the average purchase decreased from €166 to €125”.

Dvorský said that the lower average purchase price reflects several trends but primarily shows that online shopping is becoming more common when buying lower-value items.

With regards to how customers pay for their online purchases, Slovakia and the Czech Republic remain quite different from consumers in other countries as both Slovak and Czech shoppers prefer to pay for their orders upon delivery. According to SAEC data, more than one half of Slovak online buyers, 52 percent, use this payment method and two thirds of the overall value of purchases is arranged as payment upon delivery.

Dvorský believes that even though trust in online shopping has increased, Slovaks and Czechs prefer to use this method of payment because “the shopper never knows who is on the opposite end [of the transaction]”. Paying via a bank transfer is the second most poplar way to purchase online goods or services with 23 percent of shoppers using this method, followed by 9 percent using a bank card.



Significant market players



Dvorský said that even though there are thousands of online shops in Slovakia only some tens of them are significant market players.

“There are a lot of shops run by their owners and family relatives,” said Dvorský. “The trend is that the large online shops are gradually acquiring these small shops and in this way they are strengthening their position in the market. But in each market segment, for example in books, electronics, etc, there are actually only two or three key players who are moving the market.”

Martin Štrba from the biggest online bookshop in Slovakia, martinus.sk, expects that this trend will remain for some years to come in Slovakia and that developments here are mimicking those in Western Europe.

“In developed countries people trust online shopping more and prefer quality and fast handling of an order,” Štrba told The Slovak Spectator. “In the Visegrad Four countries, customers decide primarily according to the price.”

Hodboď of Heureka.cz expects that companies in the online marketplace will need to be more professional to succeed.

“There are a lot of people who are running an e-shop as a part-time job,” Hodboď told The Slovak Spectator. “But customers require 100 percent quality of service. Only those [firms] which accept the customer as the prime factor in their activities can offer it.”

Projected trends



Observers of the online marketplace expect that the number of online shoppers will keep growing in Slovakia and also note that it is becoming more difficult to open a new online shop and compete with well-established shops so new entrants will be searching for so-far unoccupied market segments.

“Even though cars in the US are being sold online, I don’t expect that this will happen in Slovakia in the near future as Slovaks perceive buying a car as a big deal and want to physically see the car,” said Dvorský. “Instead, I see space in opening online shops for certain groups of customers, for example pensioners or physically-challenged individuals. This means opening an e-shop where they will find everything they need in one place.”

In the future Dvorský expects that other advantages of online shopping will draw more customers into e-shops – factors such as the comfort of shopping from a computer desk, saving time, avoiding queues in shops, and delivery of goods directly to their homes.

But the industry’s future has several strategies and directions as there are traditional bricks-and-mortar shops that have begun selling their products online with identical or differing prices and there are also e-shops launching bricks-and-mortar shops.

The Nay company has traditionally sold electronics and appliances successfully from its chain of bricks-and-mortar stores but it is also selling goods online at the same price.

“Our internet shop is primarily a supplementary service for our customers who want to buy from the comfort of their homes or live farther away from our stores,” František Vámoši, the head of the marketing department at Nay, told The Slovak Spectator. “We provide the same assortment of goods [on the internet] for the same price and clients can use all the same services as in our bricks-and-mortar stores.”

Online shopping enables a customer to buy any Nay product online and then choose to pick up the product at any of the Nay stores.

Vámoši thinks that online shopping should not mimic the selling strategies of traditional bricks-and-mortar stores.

“For the time being [internet-based] forms and products are not mimicking bricks-and-mortar stores and their assortment but on the contrary are endeavouring to use the advantages and exceptionality of the internet, i.e. simpler and faster communication with customers, products in digitalised forms, etc.,” said Vámoši.

Vámoši is also seeing an upward trend in the sale of products with digital content such as e-books, digitalised music, e-newspapers, e-magazines, as well as games.

“In general, the differences between bricks-and-mortar and online shops selling classical products are disappearing,” said Vámoši. “More and more bricks-and-mortar retail chains are starting to put stress on online sales and are becoming leaders in these online shopping segments. This is also going vice versa when more and more online shops are opening networks of bricks-and-mortar shops.”

This trend reveals that retail sellers are seeking to use synergies and multichannel marketing to communicate with customers about products and sales, specific product features and want to do so by mutually supporting both classical as well as online channels.

“It is not an accident that in the developed markets of the US and UK internet shops of successful bricks-and-mortar retail chains are starting to dominate online shopping,” said Vámoši.

Clients are accustomed to high quality and a scope of supplementary services and advice from bricks-and-mortar stores, and Vámoši believes that the customers’ demands on online shops are increasing and that they will have to increase prices to provide this higher level of service.

Vámoši added that more and more customers are using the internet as their primary source of information prior to making a purchase and this increases the demands on traditional shops as well.

“Thus the logical outcome is the current trend of multichannel marketing and [creating] synergy rather than isolated channels of internet sales versus bricks-and-mortar stores.”

Ľubomír Drahovský, a market analyst with the Terno market survey agency, confirmed that Slovak customers are using both channels by going into a bricks-and-mortar store to “take a desired product in their hands and sense it” and then are going to an e-shop to buy it at a lower price.

“This is the way that bricks-and-mortar stores can keep their clients, by providing highly specialised consultancy services,” Drahovský told The Slovak Spectator.



Hopes for the Christmas season



Online shops are hoping for a good Christmas shopping season and a return of their sales to pre-crisis levels.

“All hope for this, but we will see what attitudes customers will take to Christmas in general, whether they will prefer buying presents or shopping for Christmas foodstuffs, decorations and the like,” said Dvorský, adding that for shops such as those typically selling electric appliances, electronics, books and similar products the Christmas season may account for as much as one third of their annual turnover.

“The Christmas season in online shops is just starting, so we will see,” said Dvorský, adding that he does not expect any change in the choice of products and services purchased online as these are traditionally books, clothing and footwear, and health & beauty products as well as cameras and household appliances.

The Christmas season has already started at martinus.sk and Štrba said his customers are not waiting for last-minute shopping and want to be sure that the books they order arrive before Christmas.

“Annually, we have been growing in tens of percents and thus we expect that this season will be stronger than the previous one,” Štrba said.


Get daily Slovak news directly to your inbox

Top stories

News digest: Lockdown not out of the question, PM Matovič says

The overview of news from Wednesday, October 21, 2020.

PM Igor Matovič says lockdown is still in play.

A curfew for those who refuse testing? Lawyers and president have doubts

The government risks the Constitutional Court canceling the nationwide testing.

Illustrative stock photo

The cabinet approves plan for permanent kurzarbeit

The new fund is expected to be introduced from 2022.

Labour Minister Milan Krajniak